Double-Digit Returns Without Chasing Market Hype
MP Market Review - August 29, 2025
Summary
Welcome to this week’s MP Market Review – your go-to source for insights and updates on the Canadian dividend growth companies we track on The List! While we’ve expanded our watchlists to include U.S. companies, The List-USA, our Canadian lineup remains the cornerstone of our coaching approach.
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Your journey to dividend growth mastery starts here – let’s dive in!
Below The List chart is our monthly U.S. watchlist, The List-USA.
Last week, dividend growth of The List stayed the same with an average return of +6.9% YTD (income).
Last week, the price of The List was down from the previous week with an average return of +11.1% YTD (capital).
Last week, there were no dividend announcements from companies on The List.
Last week, there were three earnings reports from companies on The List.
This week, two companies from The List will report on earnings.
DGI Clipboard
“Measuring performance without simultaneously measuring valuation is a job half done.”
- Chuck Carnevale
Double-Digit Returns Without Chasing Market Hype
Intro
When I launched our model portfolios for coaching purposes in Canada in May 2022 and in the United States in May 2023, I had two clear goals.
The first and most important goal was to generate a steadily rising stream of dividends from high-quality companies. The second goal was to build portfolios capable of delivering above-average total returns over the long term (five to ten years). By “average,” I mean the benchmark indexes: the TSX Composite in Canada and the S&P 500 in the United States.
Achieving our second goal (outperforming the indexes) has proven to be challenging in the short term.
This past week I shared the quarterly performance results for our Canadian and American model portfolios. Both are now delivering annualized returns above 10% since inception.
Our Canadian model portfolio experienced some early cash drag as we were conservative in putting our initial capital to work. As the portfolio has grown, shorter-term returns have strengthened, and we are now seeing much better results. While index returns have also been strong, our portfolio is quickly closing the gap.
Although I have not shared as much commentary on the USA model portfolio in this blog, it is worth noting the remarkable performance of the S&P 500 over the past 1, 3, 5, and 10 years. The returns have been outstanding, and it is understandable why many investors might conclude that simply owning the index is the best way to outperform a dividend growth investing strategy. Since we did not have a public-facing DGI American portfolio over that same period, we cannot know for certain how the comparison would have played out.
A few things to consider before abandoning DGI for an American index investing strategy:
1. The Magnificent Seven (Apple, Microsoft, Nvidia, Amazon, Meta, Alphabet, and Tesla) have collectively added nearly $7 trillion in market value since early 2023. That surge represents almost the entire gain of the S&P 500 index over that period.
2. Today, these seven stocks make up 34% of the S&P 500 index, and they are trading at some of the highest valuations in history.
If you had not owned at least a couple of those companies, your total return from the index over the past two and a half years would have been essentially zero.
Takeaway
As we continue building our model DGI portfolios, I am encouraged by the consistency of our results this past quarter. While we acknowledge the strength of index investing today, we remain confident that our approach will deliver superior results over the long term.
The key is to stay focused, avoiding the temptation of chasing indexes or stocks trading at stretched valuations, and instead remain disciplined in following the process. That discipline not only builds lasting wealth but also provides peace of mind, allowing you to sleep well at night without worrying about when the next correction will arrive.
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DGI Scorecard
The List (2025)
The Magic Pants 2025 list includes 29 Canadian dividend growth stocks. Here are the criteria to be considered a candidate on The List:
Dividend growth streak: 10 years or more.
Market cap: Minimum one billion dollars.
Diversification: Limit of five companies per sector, preferably two per industry.
Cyclicality: Exclude REITs and pure-play energy companies due to high cyclicality.
Based on these criteria, companies are added or removed from The List annually on January 1. Prices and dividends are updated weekly.
The List is not a portfolio but a coaching tool that helps us think about ideas and risk manage our model portfolio. We own some but not all the companies on The List. In other words, we might want to buy these companies when valuation looks attractive.
Our newsletter provides readers with a comprehensive insight into the implementation and advantages of our dividend growth investing strategy. This evidence-based, unbiased approach empowers DIY investors to outperform both actively managed dividend funds and passively managed indexes and dividend ETFs over longer-term horizons.
Note: In the last week of every month, I will show the updated watchlist for our American dividend growers, The List-USA. It will be shown after the Canadian watchlist below.
Performance of 'The List'
Last week, dividend growth stayed the same, with an average return of +6.9% YTD (income).
The price of 'The List' was down from the previous week, with an average YTD return of +11.1% (capital).
Even though prices may fluctuate, the dependable growth in our income does not. Stay the course. You will be happy you did.
Last week's best performers on 'The List' were Royal Bank of Canada (RY-T), up +4.68%.; Brookfield Infrastructure Partners (BIP-N), up +2.54%; and goeasy Ltd. (GSY-T) up +1.87%.
Dollarama Inc. (DOL-T) was the worst performer last week, down -3.15%.
From breaking news to quarterly earnings reports, we break down the week’s biggest headlines to help you make sense of the market.
